Industry comment, updates and news from the Websters team.
Jill Carey of Taylor Wessing comments on a recent case concerning the ability of landlords to recover the cost of improvements from tenants where the lease permits it, but the statutory regime for residential service charges also applies to restrict recovery.
Read the full article here.
When we started specialising in service charge audits they were frequently undertaken as part of the property owner’s general annual audit. This was not a satisfactory situation because specialist knowledge is needed for accurate service charge accounting assessment.
Since that time many large landlords in the UK have moved to providing independent audited accounts for their service charges thus removing one cause of landlord : tenant conflict
Eversheds has reported that, whilst there is no hard rule that use of general words in a service charge clause prevents recovery of related legal costs, in order to be certain, an obligation to pay solicitors’ costs under the service charge provision should be clearly spelt out. If those solicitors’ costs are to include litigation costs then that should equally be made clear.
Remember that, even where the lease makes provision for recovery of costs as part of the service charge, this can be overridden by the provisions of s20C of the Landlord and Tenant Act 1985.
This was clarified in the recent case Sinclair Gardens Investments (Kensington) LTD v Avon Estates (London) LTD.
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In an article by Mills and Reeve, a tenant of part of a building had some concerns regarding the service charge. Due to these concerns, payment of the service charge was withheld by the tenant. There was correspondence between the tenant and the landlord’s managing agent’s solicitor regarding this matter and a service charge dispute had arisen on at least five occasions. In readiness for a sale of the property, draft replies to commercial property standard enquiries were prepared and the replies said that there were no disputes outstanding, likely or in the past and that there were no service charge arrears. The buyer’s solicitors asked for further information in relation to the service charge accounts and collection period. This information was not provided. Consequently, the court decided that the buyer was entitled to terminate the sale contract, have the deposit returned and to receive damages for deceit.
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Samantha Bell of Gordons has reported that, in the recent case of Queensbridge Investments Ltd v Lodge, a landlord owned a property which had been let to residential and commercial tenants. The tenants claimed that the disrepair to the property was causing safety issues. Due to the landlord’s failure to carry out repairs, the residential tenants applied to the First-Tier Tribunal for a management order under Section 24 of the Landlord and Tenant Act 1987. In other words, the tenants wanted the Court to take management of the building out of the landlord’s hands.
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Samantha Bell of Gordons notes that, in a recent case, a residential tenant claimed that the disrepair to the property was causing safety issues. The tenant applied to the First-Tier Tribunal for a management order under Section 24 of the Landlord and Tenant Act 1987, whereby the Court would take management of the building out of the landlord’s hands. The Tribunal criticised the landlord and found that it had failed to comply with its responsibilities…
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Dilpesh Shah of DAC Beachcroft has reported that, in a recent court decision, Fairbairn v Etal Court Maintenance Ltd (2015), it has been confirmed that landlords of residential premises cannot charge their tenants through the service charge for costs which have been incurred as a result of the landlord’s own breach.
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Dutton Gregory LLP has reported that managing residential property is a legally complex task and is not for amateurs. In one case which proved the point, benevolent landlords found themselves having to take court action after dispensing with formalities in order to save their tenants money.
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Morven Coulter of Morton Fraser notes that, after spending some time agreeing terms for new lettings, landlords want those terms documented and the tenant in and paying rent as soon as possible. They don’t welcome new points being debated or any delay caused by further discussions on commercial points that they thought were agreed.
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Websters has been specialising in the production and audit of service charge accounts for nearly forty years. When we started this work, service charge audits were frequently undertaken as part of the property owner’s general annual audit. This was not a satisfactory situation because specialist knowledge is needed for accurate service charge accounting assessment. Some of the advantages of an audit are:-
We now act for a very large number of landlords, who recognise that independently audited accounts can remove a major cause of conflict with their tenants
